Egypt’s external debt is expected to climb to 21.8% of GDP in fiscal year (FY) 2019/2020, registering $82.2bn, according to a FocusEconomics Consensus Forecast report.
The FocusEconomics Consensus Forecast report for the Middle East and North Africa for August 2016 indicates that external debt will rise to 17.5% of GDP ($54.9bn) in FY 2015/2016, compared to when it was 14.5% ($48.1bn) in FY 2014/2015. The report says this will reach 19% of GDP ($62.1bn) in FY 2016/2017.
For international reserves, FocusEconomics forecasts that this would increase to $19.1bn in FY 2016/2017, compared to $17.6bn in FY 2015/2016. It would increase to $27.5bn in FY 2019/2020.
The report predicted that public debt would reach 91% of GDP in FY 2015/2016 and is expected to decrease to 90.6% of GDP in FY 2016/2017 and continue its decline to 77.3% of GDP in FY 2019/2020.
However, imports are forecasted to decrease to $55.3bn in 2016 compared to $75.4bn in 2015 with a small increase in 2017 to $56.6bn. The imports are expected to reach $60bn in 2020.
Exports are also expected to decrease in 2016 to $19.7bn, compared to $26.5 in 2015, but the report forecasts that exports should increase to $24.6bn in 2020.
Thus, industrial production is expected to sharply decrease in 2016 to reach an annual variation of 2.7% compared to 5.5% in 2015. The annual variation of industrial production is predicted to continue its decrease through 2017 down to 2.6%, though it is forecasted to increase to 4.4% in 2020.
As for the exchange rate between the Egyptian pound and US dollar, the FocusEconomics panellists forecast that it will reach EGP 9.65 by the end of 2016. The official exchange rate in the Central Bank of Egypt is EGP 8.78 as of 16 March, and it was EGP 7.83 in 2015. The panellists expect that the exchange rate will rise to EGP 10.19 by end of 2017 and EGP 13.10 by the end of 2020.
“Egypt’s economic outlook is clouded by the acute US dollar crunch, weak fiscal accounts and political instability. Our panellists expect GDP to have expanded 3.1% in FY 2015/2016 and forecast growth of 3.7% in FY 2016/2017,” the report read. “Inflation soared from 12.3% in May to 14.0% in June—the highest reading since early 2009 and panellists expect inflation to average 11.7% in 2016 and 11.4% in 2017.”
Meanwhile, the average annual inflation rose from 10.0% in May to 10.2% in June.
FocusEconomics Consensus Forecast panellists expect total investment to increase 5.6% in FY 2015/2016, which is down 0.5% from July’s forecast. It expects total investment to expand 6.2% in FY 2016/ 2017.
The Egyptian government targets a growth of 4.4% in FY 2015/2016 and of 5.2% in FY 2016/ 2017.
Further, FocusEconomics Consensus Forecast panellists expect the overnight deposit rate to average 11.99% in 2016 and 11.50% in 2017.
The current overnight deposit rate rests at a multi-year high of 11.75%, the overnight lending rate at 12.75% and the main operation rate at 12.25%.